PF
Partha
(Querist) 16 May 2011
This query is : Resolved
Good morning to all the experts on the panel,
i have a peculiar issue, our company is a new company and in the salary we just had Basic and Transport as the components of the salary.
We did not have any issues but we employees realised that this structure was not tax friendly and requested the management for including HRA, LTA, Transport allowance, reduce the Basic, etc which will increase our take home and also benefit from the provisions within the tax laws which we can utilize.
Management did make the changes but, now the management has come back saying that the PF authorities are not approving this. as it will reduce the PF contribution.
To our understanding that this is employees choice to move from the salary structure which is more tax friendly and but virtue of which they will realise more money in hand. Also the management has retained the option for those who want to continue with the current salary structure.
Need this group to pls advice us on how this can be made workable for us ? is there any precedence to this ? what can we put across to the PF authorities to approve this ?
Thanking you,
SKP
Guest
(Expert) 18 May 2011
It is not understood, how the PF authorities are concerned with the internal control of the organization about fixation of salry structure? The PF authorities may be asked to quote the provisions of PF rules under which they can interfere in the management control of the organization about fixation of salaries etc.
Kamal Prasoon Sinha
(Expert) 19 May 2011
Mr. Dhingra is right that fixation of salary structure has nothing to do with PF dept.
Possibility is that in the new salary structure employee's basic salary is reduced...reducing the overall PF contribution of employees and PF authorities may have questioned this.
Generally reduction in basic salary is considered as a punishment unless done with geniune reason.
Partha
(Querist) 20 May 2011
Thanks a lot Mr Dingra and Mr Kamal, however this is an option which was requested by the employees. Ultimtely the PF is employees money which is out of his hard earned salary.
The same employee have asked for more tax friendly salary structure, due to which the other components like the HRA, LTA etc were added but the fact is that this needs to be funded by reducing from the only component which was "Basic" automatically the PF contribution reduces.
So if it is voluntry why is PF authority object to it, and what are the provisions to qualify the change.
Thanks,
Rgds,
Partha.
